City Council approved a utility rate increase and denied an increase on the City Service Fee during its meeting March 11.
City staff requested a 6% increase on the sewer, or wastewater, utility charge, and a 1% increase on the City Service Fee. The 6% sewer rate increase equates to a 3.3% increase on the overall bill.
During discussions on the matter in a work session prior to the regular meeting, Councilor David McClain said he did not support an increase on the City Service Fee, which, he noted, he was not in support of implementing at the start. However, he added, he would be in favor of an automatic increase on utility rates that would account for inflation and added costs.
“As we all know, DEQ mandates and state mandates keep increasing on us every year, and I don’t know if a 3% increase would keep up with it,” he said. “But I would favor something like that instead of coming back every year and arguing and debating about this issue. I would just like to see it set at 3% every year.”
Before the matters came to a vote, Deputy Fire Marshal Jason Adamson approached the council to show his support for the possible municipal jail levy.
At the same time, Adamson called out three council members who, according to the Oregon Secretary of State PAC supporter database, financially supported Candidate Identification and Support Committee (CISC) which “has opposed increases in public support stuff in the past,” yet were in support of the jail levy.When the fire district was asking for a levy in 2024, Adamson said CISC was in “heavy opposition.” He said CISC mailed “incorrect and deceiving information about how the fire district operates, its call statistics and the conditions of its budget.”
Since the levy failed, five positions and one ambulance at the fire district were cut.
“I hope CISC does not blast out false information about the police levy as they did the fire levy,” Adamson said.
Naming the political donors – Dave Workman, Ken Jackola and David McClain – Adamson requested they ask CISC to not oppose the police levy, and to be prepared to respond to any potential anti-police-levy campaign from the PAC.
Following public comment, the council killed the City Service Fee increase, but approved the 6% sewer rate increase 5-1; McClain opposed.
Water, Wastewater, Storm Utility Snapshot
During the work session, the council heard an update on city utility systems and related finances.
In this fiscal year of 2025-2026, the water treatment plant so far has produced more than 516 million gallons of water.
According to Public Works Director Jason Williams, the city is focusing on undersized water main replacements throughout Lebanon, which includes tying off dead ends and fixing water quality issues and leaks. The city is still “battling” the effects of the Green Peter drawdown.
Available funding allows the city to replace approximately 2,500 to 3,000 lineal feet of line a year, which equates to a 160-year replacement cycle with the city’s 89 miles of distribution lines. Typical life cycles of the waterlines are expected to last about 75 years.
The wastewater treatment plant this fiscal year so far has treated about 703 million gallons of sewage. Williams said they continue to see failing aged sewer lines and laterals.
The city is currently designing a plan for disposal of Class B biosolids as new DEQ rules are making it harder and more costly to dispose of its processed sewage sludge.
Available funding allows the city to replace approximately 2,000 to 2,500 lineal feet of sewer main line a year, equating to a 170-year replacement cycle with the city’s 70 miles of distribution lines. Typical life cycles of older pipes is 50-75 years, or 100 years for newer PVC pipes.
Heavy rains are driving inflow at the wastewater plant at about 200% of normal levels. The city has about 63 miles of storm drainage mains and 52 miles of open channel drainage ways. Limited funding allows for about 1,500 lineal feet of line replacement every two to three years.
Financial Snapshot
Finance Director Brandon Neish presented a five-year financial project for the water and wastewater funds.
At the end of the current fiscal year, the water fund is expected to have an ending fund balance of $6.7 million. Assuming a 3% rate increase every year except for next year, there is a projected ending fund balance of about $2.3 million by fiscal year 2031.
“So you’re still at a point where you’re kind of dragging that fund balance and spending more than you are bringing in,” Neish said. “Because there is a significant fund balance there, you will have plenty at the end of that five-year picture, you’re still north of $2 million in available fund balance.
“However, one of the things we’ve been focusing on is making sure that we are not spending more than we are bringing in, so some sort of course correction or new revenue will be necessary in order to rebalance that as we move out into the last five years.”
In the wastewater fund, following a biosolids capital project funded through grants and loans, the expected ending fund balance for fiscal year 2027 is $794,168. Assuming a 6% rate increase next year and 3% increase each year thereafter, by fiscal year 2031, it is projected to land at $2.1 million.
“While we look okay for the next five years – and again, these are snapshots, this is the best information that we have available to us, so this is a plan and things can certainly change – but the best information says over the next five years we would be okay,” Neish said.
City Manager Ron Whitlatch explained the city is looking toward some Master Plan projects at the wastewater treatment plant that might cost upwards of $40 million or less. The city has saved $20 million and recently received an additional $2 million from the state.
The 6% increase is expected to cover the biosolids project, while the 3% increases thereafter would assist with the other projects.
Essentially, Neish said, the rate increases are planned ahead of time to prepare to pay the debt services for those upcoming projects.
“We want to be positioned well, because every year we are behind this, that’s another year worth of inflation,” Whitlatch said. “On a project that big, it’s very big, just to give you some idea of what we think it’s gonna take, we’re looking at about a four-year project.”
The Master Plan is looking at about $95 million in projects just to get the city compliant with state mandated regulation, Williams added.
“These are projects that we are being told that we have to do to meet new conditions in our permit,” Williams said.
City Service Fee Snapshot
Concerning the new $18 City Service Fee initiated in January 2025 to support a declining General Fund for city operations, Neish said things are looking up, but it would be good to look ahead.
He said this year the city anticipates about $6.9 million in property tax revenue, while personnel expenditures will cost about $9.1 million. The City Service Fee is intended to fill that gap.
Assuming the city raises that fee 1% every year, the ending fund balance stabilizes, but “starts to tip” downward at the end of fiscal year 2031.
The goal, Neish said, is to build about $2 million in available, spendable money “for one-time needs, things that pop up in a fiscal year that the council really sees as an important thing to pursue or opportunities that may pop up in the future.”
As such, the city asked council to approve a 1% increase on the service fee, making it $18.20 a month. During the council meeting, staff made the proposal, but it died on the floor.
In other business, the council:
- Honored Rod Sell for his 24 years of service to the community as a Public Works employee and volunteer, during which time he built essential infrastructure and provided oversight and guidance for the city’s parks, trees and trails. Mayor Ken Jackola pointed out that all of Sell’s efforts will have a lasting impact on families to come.
- Heard a legislative update from Sean Tate, who provided a summary of activity that took place during the short session.
- Heard from a representative of DevNW, who reported they were able to repair six homes in Linn County – three in Lebanon, two in Sweet Home, one in Stayton – with grant funding last year.
- Approved a resolution that extended some “no parking” locations on N 2nd Street between Tangent and Mary streets.
- Approved the annexation of .75 acres at 2015 Stoltz Hill Road.
- Adopted an updated master plan for the wastewater treatment plant.
- Approved a Statutory Warranty Deed incorporating the three property descriptions associated with the sale of the Santiam Travel Station.
- Trė Kennedy asked the council to consider a location where Jackson Street might be able to keep a drop-in locker box for youth in need.